Correlation Between Lion One and THUNDELARRA
Can any of the company-specific risk be diversified away by investing in both Lion One and THUNDELARRA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lion One and THUNDELARRA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion One Metals and THUNDELARRA, you can compare the effects of market volatilities on Lion One and THUNDELARRA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lion One with a short position of THUNDELARRA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and THUNDELARRA.
Diversification Opportunities for Lion One and THUNDELARRA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and THUNDELARRA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and THUNDELARRA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THUNDELARRA and Lion One is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lion One Metals are associated (or correlated) with THUNDELARRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THUNDELARRA has no effect on the direction of Lion One i.e., Lion One and THUNDELARRA go up and down completely randomly.
Pair Corralation between Lion One and THUNDELARRA
Assuming the 90 days horizon Lion One Metals is expected to generate 1.82 times more return on investment than THUNDELARRA. However, Lion One is 1.82 times more volatile than THUNDELARRA. It trades about 0.01 of its potential returns per unit of risk. THUNDELARRA is currently generating about -0.11 per unit of risk. If you would invest 18.00 in Lion One Metals on September 12, 2024 and sell it today you would lose (1.00) from holding Lion One Metals or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Lion One Metals vs. THUNDELARRA
Performance |
| Timeline |
| Lion One Metals |
| THUNDELARRA |
Lion One and THUNDELARRA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and THUNDELARRA
The main advantage of trading using opposite Lion One and THUNDELARRA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, THUNDELARRA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in THUNDELARRA will offset losses from the drop in THUNDELARRA's long position.| Lion One vs. Franco Nevada | Lion One vs. Superior Plus Corp | Lion One vs. SIVERS SEMICONDUCTORS AB | Lion One vs. Norsk Hydro ASA |
| THUNDELARRA vs. SAFETY MEDICAL PROD | THUNDELARRA vs. COFCO Joycome Foods | THUNDELARRA vs. AVITA Medical | THUNDELARRA vs. Clearside Biomedical |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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